Monday, May 17, 2010

Murdoch out to challenge local papers?

Just weeks after launching a Big Apple edition to challenge the New York Times, Rupert Murdoch may be getting ready to put a bit of competitive pressure on other newspaper publishers, too.

This possibility was signaled when it was revealed last week that the Wall Street Journal is buying tons of new press towers to enable it to print color on an estimated 75% more pages of the newspaper than it can today.

While Murdoch’s precise motives are not known, the news that he is expanding his presses – broken here by Newspapers & Technology Magazine – is big indeed for manroland, a German manufacturer that hasn’t seen an order this big in the United States for nearly 10 years.

The official announcement of the intended purchase, which may indicate more details of Murdoch’s plan, is expected to come later this week at the Ipex printing trade show in the United Kingdom.

From the information that has leaked out about the order to date, industry production experts believe the new units will boost the Journal’s color capacity to 56 pages per edition from the 32 pages it can print today.

News Corp. owns the satellite plants that produce approximately half of the 2 million papers it distributes daily. Contract printers – usually the same local newspaper publishers who soon may face new competition from Murdoch – churn out the balance of the daily press run. Industry sources report that press capacity also is being enhanced at some of the contract printing locations.

While the obvious purpose of the press upgrade is to make the Journal more graphically appealing to existing readers and national advertisers, it also potentially sets the stage for Murdoch to compete for readers and local advertisers with newspapers in major markets across the land.

At minimum, a jazzier-looking Journal might attract additional subscribers and could persuade national advertisers to shift more of their purchases to the paper.

Murdoch may take the opportunity to reposition the Journal as a more generally focused national paper, continuing the migration of the paper under Murdoch’s ownership away from its traditional, hard-core business and financial focus.

But the Journal’s colorful new look – and the marketing blitz bound to accompany its introduction – also may encourage high-end local retailers like department stores, jewelers and luxury auto dealers to divert some of their spending to the Journal. This particularly would be the case if the rollout were accompanied by introductory ad rates undercutting those charged by local newspapers.

It may not stop there. If Murdoch’s New York edition is successful in pulling readers and advertisers away from the NYT, he may elect to create additional local editions in other markets.

Although most observers agree that the New York edition of the Journal has not challenged the Times from a journalistic point of view, the effort has forced the NYT to respond to promotional pricing aimed at picking off both readers and advertisers. That is sure to put a dent in the top line at the Times.

Any form of serious competition from the Journal would put unwelcome pressure on local publishers, who have been battered by four years of advertising declines that have reduced industry revenues by 43% since 2005.

Although Murdoch’s global media enterprises were not unscathed by the Great Recession, he historically has subsidized his beloved newspapers with profits from such healthier businesses as movies, broadcasting, cable television, satellite TV and more.

But most newspaper publishers would have no similar cushion if they were forced to drop their subscription prices and ad rates to compete with a full-on Murdoch onslaught.


Blogger John Reinan said...

First ESPN, now Murdoch.

1:17 PM  
Blogger stephen strauss said...

You might also reflect upon what the Globe and Mail newspaper has done in Canada. Known formerly as the Good Grey Globe, in 2008 the paper signed a $1.7 billion contract with Transcontinental printing through the year 2028. The idea is to provide color on every page and will be up and operating in the fall. The cost coupled with the doubts about newspapers long term viability have caused some at the paper to describe the move as The Fall in the fall.

6:55 PM  
Blogger Dan said...

Could Murdoch not also be preparing to snap up third-party printing agreements? If he increases his color capacity at Dow Jones plants, he is much better positioned to expand the number of products Dow Jones prints instead of continuing the outsourcing of Wall Street Journal, etc.

2:39 PM  

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